Sin Taxes: Vermont State - Essay Example

The paper "Sin Taxes: Vermont State" is a perfect example of an essay on finance and accounting. The substances alcohol, cigarette and beer in one way or the other have a negative effect on the health of consumers. Sin tax has been active in the state of Vermont. The total revenue from sin taxes in Vermont has gone up by 3.5% with tobacco bringing in more sales than the other commodities. This is a state whose rate has been high compared to the other states and a pack of cigarettes goes for $2. Much as the real values of revenues are varied, Nevada saw 5% of its revenue coming from the sin activities. New York has a $4.35 sin tax on cigarettes and has seen many quit smoking because of the high taxes, according to The Detroit Free Press (2013).

            In the state of Vermont, businesses that deal in a property that is considered personal and tangible to the consumer usually remit a tax of 6% on these tax retail sales. Sale of other important services like electricity, artificial or natural gas has been put at a rate of 4%. This state, however, does not allow the city or local units to impose sales taxes. Vermont has however exempted food, drugs, and magazines from taxes, therefore, food tax does not apply here. Currently, in Vermont, soda is considered as food and does not, therefore, attract the 6% tax imposed on non-food items.

            Obesity has been on the rise in Vermont. This has been attributed to a collection of people being addicts of soda and similar goods. That is why a proposal by the house to introduce taxes on soda has been met with violent statements with consumers wondering about the copying procedure. 39 states are said to have taxes on soda, making the commodity less consumptive and hence recorded lesser cases of obesity than Vermont. The remaining, however, does not charge the tax on the soda. For instance, The Grand Rapids Press (2009) reported that the Massachusetts governor imposed a sales tax of 5% on candy and soda that had more than 50% sugar content. This was a health concern he was taking.

            The correlation between overall tax index levels and overall outcome index levels at the state level differs greatly depending on a collection of factors. For instance, in Cell AL5, the correlation in the index levels in the Midwest region is even. This could be attributed to the rules and laws in these states based on national laws. The correlations have been skewed to the laws that govern each state’s consumption levels and sin tax impositions.

It is common for elasticity to differ from good to good depending on the value that the consumers have on it. From economic knowledge on elasticity, prices are supposed to be lowered when demand is elastic. From the research obtained, the demand for tobacco, soda, and alcohol is still inelastic meaning that there can be a price increase consideration. This directly affects the policy recommendation by way of agreeing to the fact that there can be a price increase without seriously affecting the consumer’s economic strength and livelihoods. It would also consider that the consumers may resort to taking more hard liquor which would also affect a consideration to alter the prices of this hard liquor. This recommendation is based on budgetary impact because Vermont has been making economic losses year after year and house speaker Andy Dillon in 2009 was reported as giving a report that the state was expecting a $1.77 billion deficit. It is also based on health impacts because the state has recorded extreme cases of obesity compared to others. Other factors would be the ‘woodwork Phenomenon where the people are being encouraged to “come out of the woods’ and take insurance policies.